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Could Facebook Spell Trouble For Snapchat’s IPO?

Photo of Karol Severin
by Karol Severin

Snapchat is gearing up for its IPO which, if successful, could provide enough capital to finalize the company’s pivot from a trendy social messaging app into a full-fledged mobile platform.

With new capital Snapchat will be able to compete much more effectively with Facebook. The threat will no longer be merely about cannibalizing youngish audiences. Rather, it could potentially be transformed into a competing rising mobile platform capable of stealing meaningful ad dollar market share from Facebook.

The more successful the IPO, the more potential trouble will Snapchat be able to cause for Mark Zuckerberg’s empire.

We all know that Wall Street loves a good tech growth story, and is fast to punish those that don’t live up to the expectations.

And that is why Facebook Inc. is doing everything in its power to diminish Snapchat’s future growth outlook. Just look at all the Snapchat-competitive product launches since July:

Secret Conversations on Messenger (Disappearing messages)Instagram Stories (a la Snapchat Stories)Messenger Day (a la Snapchat Stories launched in countries where Snapchat doesn’t operate yet)Facebook masks on LiveFacebook Flash (A standalone Snapchat-like app launched in countries outside of Snapchat’s geographic influence)Disappearing Live Video And Messages on Instagram

Download numbers from Priori Data show that Snapchat has been catching up in terms of monthly downloads against both Messenger and Instagram in the first half of 2016. From March to June, it even surpassed the two platforms in global monthly downloads on iOS. However, in the second half of the year, much of the gain has evaporated with Snapchat coming last of the three again since September. It seems Facebook’s strategy is working.

Of course, downloads are only partially reflective of active usage, but it is interesting to observe the metric on the global scale as the competition heats up.

Facebook is rightly targeting territories where Snapchat does not have a foothold yet. Given the decreasingly diverse product differentiation between the apps, the first mover advantage is a big deal. Snapchat has proven in North America and Europe that it has mass appeal. But who is going to end up capturing the rest of the global video messaging audience is yet to be seen. The more territories Facebook Inc. can establish itself in before Snapchat’s IPO, the better position it has to compete on the global scale. No wonder Facebook’s in a hurry.

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